Coronavirus may be a double-edged sword for GBP/USD bulls – while it rides higher on expectations for the Fed to cut rates, it has room to fall as the disease hits closer to home. And there’s always Brexit, Yohay Elam from NDDFX reports.
“Investors are flocking to the safety of American debt markets. The growing odds that the Federal Reserve cuts rates are weighing heavily on the dollar.”
“In the UK, authorities have confirmed a total of 19 people infected – including two potentially from London, according to the Daily Telegraph. The spread of the illness to one of the world’s financial capitals could wreak havoc. That is one of the reasons that coronavirus may eventually hit the pound.”
“Mark Carney, the outgoing Governor of the Bank of England, has said that the institution will likely need o to downgrade its growth forecasts. His words may lay the ground for a rate cut in the UK – a decision left to Andrew Bailey, his successor. That curbs any sterling gains.”
“UK Prime Minister Boris Johnson and his government adopted a tough stance ahead of talks with the EU on post-Brexit arrangements, due on Monday. Britain may walk out of talks if not enough progress is made by June.”